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Galliford Try pushes profit target back

12 Mar 20 Galliford Try in its new incarnation has pushed back by a year its target date for reaching a 2% profit margin from construction.

Chief executive Bill Hocking
Chief executive Bill Hocking

After selling its house-building interested to Bovis Homes at the start of the year, Galliford Try was aiming for a 2% divisional margin by 2021.

Today it has pushed that back to 2022.

It said: “The revenue target of c£1.3bn set out in 2019 remains in place. The business had previously indicated a divisional 2% margin target by 2021. The group's strategy now targets a minimum divisional 2% margin across Building and Infrastructure by 2022, with the objective of achieving a Group-wide 2% margin, in the medium term, after allowing for PPP and central costs.”

For the six months to 31st December 2019, Galliford Try’s pre-exceptional revenue was £636.2m (2019 H1: £728.0m).

The bottom line pre-tax profit result was £16.6m, but the company made an operating loss of £6.7m before exceptional items.  This includes a £1.0m profit from Building and Infrastructure, which were adversely impacted by some project delays, contract settlements and legal costs.  There was a £7.7m net loss from central costs and PPP Investments.

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Galliford Try has also been forced by the Financial Reporting Council (FRC) to restate its 2018 accounts. Various issues were found with the company’s application of the new accounting standard, IFRS 154, including the recognition of revenue on construction contracts, and the classification of certain cash flows in its cash flow statement.

FRC executive director David Rule said: “The FRC found that Galliford Try overstated its revenue in 2018, which the company has now corrected. We will continue to hold companies to account when they do not comply with the requirements of relevant financial reporting standards.”

On the latest half-year results, chief executive Bill Hocking said: "This has been a period of significant change with the successful strategic disposal of the group's housebuilding divisions transforming Galliford Try into a well-capitalised, UK construction-focused business.

“The restructured group is performing well with a number of recent significant project wins, and I'm pleased to report the results for the first half of the year. Galliford Try has continued to maintain a strong pipeline of work in its chosen sectors, with excellent positions on several key frameworks in the public and regulated sectors. We are encouraged by the demand in our sectors and look to further enhance this position through the continued disciplined approach to project selection and rigorous risk management.

“The group's focus remains on safe and efficient project delivery and disciplined bottom line growth. We have a strong executive board and management team who are focused on a values-driven, people-orientated, progressive company, working together to deliver for our clients and stakeholders.  I am confident that our clear strategy will deliver sustainable results."

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